CFPB Cancels $95 Million Settlement With Navy Federal CU

America’s consumer watchdog has cancelled a $95 million fine against the country’s largest credit union.

The Consumer Financial Protection Bureau (CFPB) levied that penalty against Navy Federal Credit Union last year, alleging the lender had charged its members illegal overdraft fees.

But on Tuesday (July 1), the CFPB issued an order terminating that decision, without providing its reasoning for the move. It is the latest in a series of rollbacks by the agency since President Donald Trump took office.

The CFPB in November ordered Navy Federal to repay its customers $80 million over what it said were illegally-charged fees, as well as a $15 million penalty to the agency’s victims relief fund. It was the largest amount the CFPB had ever collected from a credit union for illegal activity.

According to the CFPB, the credit union levied those fees — collected between 2017 and 2022 — even when member accounts showed sufficient funds.

“Navy Federal illegally harvested tens of millions of dollars in junk fees, including from active duty servicemembers and veterans,” Rohit Chopra, the CFPB’s director at the time, said in a news release.

The credit union said then that it had cooperated with the CFPB’s investigation and would “continue to comply with all applicable laws and regulations, just as we always have and as we believe we did here,” adding in a news release that the settlement “enables us to focus on serving our members and their families.”

The decision comes as the future of the CFPB is in flux, with the pending tax/spending bill containing a provision that cuts the agency’s funding nearly in half.

The CFPB has been a target of attacks from Republican lawmakers since it was founded, with critics calling it a burden on free enterprise. Trump has gone as far to call for the agency to be eliminated, and has moved to cut 90% of the bureau’s staff.

Democrats have championed the CFPB for its work in protecting and returning money to consumers harmed by lenders.

Meanwhile, PYMNTS wrote earlier this week about the uncertainty surrounding the fate of the  so-called “open banking rule,” also named Section 1033, as it relates to the CFPB.

This rule helps govern how banking customers allow their data to be shared with third parties such as FinTechs. The CFPB could rework the rule, or seek more input from banks in reference to data sharing and liabilities connected to that data.